Energy firms owe banks N3.72trn – CBN

Power firms and oil and gas companies operating in Nigeria are owing banks in the country about N3.72 trillion as at June 2015, according to data obtained from the Central Bank of Nigeria, CBN. The CBN, in its Statistical Bulletin for the Second Quarter of 2015, said the indebtedness of the energy firms was 27.7 per cent of the total credit to the private sector which stood at N13.433 trillion in the period under review.

The huge debts by the firms are being attributed to the low price of oil in the international market, which has negatively impacted on the revenue profile of the companies.

The total indebtedness of the energy firms as at June end was N147 billion or 4.11 per cent above their total debts of N3.573 trillion as the end of 2014. But it represented a slight decline of N108 billion or 2.82 per cent compared to the N3.828 trillion recorded as at the end of May 2015.

Giving a breakdown of banks’ credit to the energy sector, the CBN said at the end of June, downstream oil and gas, natural gas and crude oil refining companies owed banks N2.059 trillion compared to N2.285 trillion and N2.047 trillion owed in May 2015 and December 2014, respectively.

Similarly, independent power projects and power generating companies were indebted to the banks to the tune of N353.91 billion, compared to N357.501 billion owed in May 2015, and N276.125 billion as at the end of 2014.

On the other hand, upstream oil and gas services companies owed banks N1.147 trillion against N1.027 trillion and N1.099 trillion as at May 2015, and December 2015. Power transmission and distribution companies owed N161.244 billion compared to N158.57 billion and N150.88 billion as at May 2015 and December 2014, respectively.

In its analysis, the CBN said: “Net domestic credit (NDC) increased from its level in December 2014 by N2.537 trillion or 13.45 per cent to N21.41 trillion in the review period, indicating a 15.85 percentage points decrease below the provisional programmed target of 29.30 per cent for fiscal 2015, but 28.29 per cent higher than the level achieved a year earlier.

“Net credit to government, year-to-date, rose by 231.72 per cent showing 195.67 percentage points increase above the provisional programmed target of 36.05 per cent for fiscal 2015. “Credit to private sector increased from its level in December 2014 by N782.10 billion or 4.32 per cent to N18.897 trillion. At this level, it was 21.74 percentage points lower than the provisional programmed target of 26.06 per cent for fiscal 2015.”

The report further attributed the increase in credit to government on a N1.183 trillion drawdown of government deposits which overshot the N572.5 billion expansion in claims on government. According to the report, these movements were traced to N1.131 trillion drawdown.

This is on government deposits by the CBN, and N47.1 billion contraction of credit to government by commercial banks. In its analysis on private sector credit, the CBN said: “The 0.6 per cent increase in claims on private sector was accounted for by the increases of N68.3 billion or 0.6 per cent and N16.0 billion or 1.8 per cent in loans and advances to other customers and investments, respectively.